Maintaining Internal Equity

The Scanlon Equity Principle is often depicted as an equilateral triangle with multiple stakeholders of investors, employees and customers on each side. The triangle represents the idea that all major stakeholders must be satisfied for an organization to succeed.

Equity, however, also includes the idea of fairness. In this view of Equity, each stakeholder group must also experience fairness within the group. In other words, customers must feel like they are treated fairly compared to other customers; investors must feel they are treated fairly; and employees must feel they are treated fairly in comparison to other employees in the organization.

"...if employees' equitable rights are not established and realized, the organization will simply not be able to satisfy its customers and investors."
-Dr. Carl Frost

Ten Ways To Maintain Internal Equity

1. Leaders must lead by example. If sacrifice and risk are required for the rank and file, leaders should be the first to demonstrate they are ready to participate.

2. Demonstrate that "we are all in this together." No group is less important than another.

3. Eliminate the "Status Perks" that do not add value.

4. Leaders should spend time with the troops where the work is being done. During a crisis it is especially important that they be seen.

5. Set up a mechanism or system to monitor and adjudicate issue of internal Equity. This prevents small problem from becoming big problems.

6. Be careful about creating internal competition. Focus factories, contests, quotas, team bonuses, recognition programs, etc. can easily spin out of control and create internal Equity problems if they are not carefully handled. Remember: you do not want internal competition - you want the focus to be on competing externally.

7. Practice Identity. Make sure that people understand the different roles and responsibilities in your organization.

8. If possible, eliminate different uniforms. Company logo wear, which makes everyone look the same, helps build internal Equity.

9. Job security, healthcare, good working conditions and pension protection are issues for everyone, not just executives. Make sure everyone shares the risk and enjoys a safety net.

10. Refocus on external Equity. If you are spending too much time talking about internal Equity, you may not be focused enough on customers and investors.

Questions to ponder:

Who is responsible for internal Equity in your organization?
What do you do to maintain fairness in your organization?